United Kingdom growth in 2017 downgraded as consumer spending slows

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Armed with more information following an initial estimate, the Office for National Statistics said Thursday that the British economy expanded by only 0.4 percent in the October to December period, down from 0.5 percent before, largely because of lower than anticipated industrial production.

However, the number of people in work grew by less than expected, rising by 88,000, about half the consensus forecast in a Reuters poll of economists.

United Kingdom economic growth was been revised down to 0.4 per cent for the final quarter of 2017 in the second estimate of national income produced by the Office for National Statistics.

"January's weak retail sales figures, and the news that factory orders fell to a four-month low, all point towards continued weakness in the United Kingdom economy".

The number of unemployed rose by 46,000 from the September quarter to 1.47 million.

The UK jobless rate increased for the first time in almost two years in the fourth quarter and wages grew at a steady pace.

Chris Williamson at IHS Markit said: "The economy grew less than previously thought in the final three months of 2017, and a further slowdown looks likely at the start of 2018".

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As a result of the increase, the unemployment rate on a quarterly basis ticked up for the first time since February 2016, albeit by a modest 0.1 percentage point to a still historically low level of 4.4 percent.

However, Samuel Tombs, Pantheon Macroeconomics chief United Kingdom economist, said: 'This is not an economy that needs cooling with higher interest rates.

The number of people classed as economically inactive, including students, those on long-term sick leave, taken early retirement or who have given up looking for work, fell by 109,000 to 8.7 million, giving a rate of 21%.

Excluding bonuses, earnings rose by 2.5% year-on-year against expectations for a 2.4% rise.

Construction was the worst-performing sector, with output estimated to have decreased by 0.7% in the fourth quarter. Currently, wages are growing about 2.5 percent on average against price increases of about 3 percent. The number of Eastern European workers fell.

The government recorded a January budget surplus of £10 billion, slightly above forecasts, helped by strong income tax receipts which typically jump in that month. Officials say that more tightening will be needed to keep prices in check, though Carney refused to be drawn on the exact timing of the next hike on Wednesday.